The exit of the United Kingdom from the European Union, an event known in the press as Brexit, caused a truly unpredictable upset of the balance. We are not talking about customs duties, entry visas, the need for passports and things that are heard on the news every day, but a sort of “butterfly effect” which – somehow – reached as far as Milan.
Yes, because it is recent news that after Brexit, a large number of employees in the financial sector have left London, due to the prohibitive cost of living. And Milan is one of the cities they prefer, for a number of reasons. The first concerns the decidedly generous tax breaks that the government decided to introduce in 2017. Secondly, there are the futuristic building redevelopment projects that have been going on for years in various areas of the city, starting with Porta Nuova, which has been completely for Expo 2015. Up and down the Lombard capital, shopping malls, residential and luxury shops have been developed, all that is needed to attract London’s small-medium bourgeoisie after Brexit.
The consequence? It is known that London bankers have a high purchasing power and are willing to spend, and this has led to a marked growth in the luxury real estate sector in Milan.
But not only London: Italians residing abroad who decide to return to Italy also enjoy tax breaks. In particular, there is a flat tax set at 100,000 euros and a 70% reduction on income from work for the first 5 years. In short, a good boost, which raises the purchasing power of our compatriots who decide to return home, so that they can afford to buy a house that is “more beautiful than normal” in Milan.
On the other hand, the data from the Ministry of the Economy does not lie: in fact, around sixteen thousand Italians and foreigners took advantage of these concessions in 2020, and over 400 of them joined the new flat tax regime.
Luxury market and rising mortgage rates
How does the luxury real estate market in Milan compare to mortgage rates, whose growth seems to have no end? Gone are the days when you could buy a house by paying 1% annual interest, but it must be said that, although cheap money has run out and has led to a contraction in real estate markets all over the world, Italy – and especially Milan – is less exposed than other countries such as the United States, Canada or indeed Great Britain. This is because the real estate sector has had a slower recovery after the global economic crisis, and therefore the negative change is decidedly less evident in terms of percentage points.
Hence the reason why Milan is not suffering enormously from the increase in interest rates, but on the contrary it is turning into an ever brighter star in the firmament of the real estate sector around the world.
Milan, the business city in the land of idleness
It is clear that Milan’s location is another factor that attracts British bankers after Brexit. We are an hour’s flight from Frankfurt, the financial center of the European Union, less than a two-hour flight from London, a two-hour drive from the sea and an hour and a half from the ski slopes of the Alps.
But there is also work: many investment firms and banks are leaving the United Kingdom, starting with the Italian Unicredit and Mediobanca, but also large international groups such as Goldman Sachs, which recently left London for Milan. Certas, Eislar Capital UK and Andera Partners have also opened branches in recent years.
The Lombard capital is therefore an option for overseas investments, so much so that – by way of example – a residential complex of 103 units was sold before the end of the works. According to Paolo Micucci, CEO of Generali’s CityLife department, “about 20% of buyers are foreigners or Italians returning from abroad”.